Consumption Ratios; Activity Rates Saludable Company produces two types of get-well cards: scented and regular. Drivers for the four activities are as follows: Scented Cards Regular Cards Inspection hours 1,080 720 Setup hours 420 180 Machine hours 960 2,880 Number of moves 2,880 720 The following activity data has been collected: Inspecting products $45,000 Setting up equipment 28,500 Machining 30,720 Moving materials 16,200 Required: 1. Calculate the consumption ratios for the four drivers (round to two decimal places). Scented Cards Regular Cards Inspection hours Setup hours Machine hours Number of moves 2. Which of the following statements indicate there is product diversity? Explain the significance of product diversity for decision making if the company chooses to use machine hours to assign all overhead. If machine hours are used as the only driver, cards would receive 25% of the overhead, and cards would receive 75% of the overhead. Yet, the cards consume well over 60% of the non-machine related overhead. Thus, the Scented cards are , and the Regular cards are . This inaccuracy can adversely affect many decisions, including pricing, keep or drop, and cost-volume-profit. 3. Calculate the activity rates that would be used to assign costs to each product (round to two decimal places). Rates: Inspecting products $ per inspection hour Setting up equipment $ per setup hour Machining $ per machine hour Moving materials $ per move 4. Suppose that the activity rate for inspecting products is $20 per inspection hour. How many hours of inspection are expected for the coming year? inspection hours
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Consumption Ratios; Activity Rates
Saludable Company produces two types of get-well cards: scented and regular. Drivers for the four activities are as follows:
Scented Cards Regular Cards Inspection hours 1,080 720 Setup hours 420 180 Machine hours 960 2,880 Number of moves 2,880 720 The following activity data has been collected:
Inspecting products $45,000 Setting up equipment 28,500 Machining 30,720 Moving materials 16,200 Required:
1. Calculate the consumption ratios for the four drivers (round to two decimal places).
Scented Cards Regular Cards Inspection hours Setup hours Machine hours Number of moves 2. Which of the following statements indicate there is product diversity?
Explain the significance of product diversity for decision making if the company chooses to use machine hours to assign all
If machine hours are used as the only driver, cards would receive 25% of the overhead, and cards would receive 75% of the overhead. Yet, the cards consume well over 60% of the non-machine related overhead. Thus, the Scented cards are , and the Regular cards are . This inaccuracy can adversely affect many decisions, including pricing, keep or drop, and cost-volume-profit.overhead .3. Calculate the activity rates that would be used to assign costs to each product (round to two decimal places).
Rates: Inspecting products $ per inspection hour Setting up equipment $ per setup hour Machining $ per machine hour Moving materials $ per move 4. Suppose that the activity rate for inspecting products is $20 per inspection hour. How many hours of inspection are expected for the coming year?
inspection hours
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